Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Koppers' Q2 2022 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. Instructions will be given for the question-and-answer session. Please note, that this event is being recorded. I will now turn the call over to Quynh McGuire. Please, go ahead.

Thanks and good morning. I'm Quynh McGuire, Vice President of Investor Relations. Welcome to our second quarter 2022 earnings conference call. We issued our press release earlier today. You may access it via our website at www.koppers.com. As indicated in our announcement, we've also posted material to the investor relations page of our website that will be referenced in today's call. Consistent with our practice in prior quarterly conference calls, this is being broadcast live on our website and a recording of this call will be available on our website for replay through November 4, 2022. At this time, I would like to direct your attention to our forward-looking disclosure statement seen on slide two. Certain comments made on this conference call may be characterized as forward-looking statements, as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of assumptions, risks, and uncertainties, including risks described in the cautionary statement included on our press release and in the company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking statements included in the company's comments, you should not regard the inclusion of such information as a representation that its objectives, plans, and projected results will be achieved. The company's actual results, performance, or achievements may differ materially from those expressed in or implied by such forward-looking statements. The company assumes no obligation to update any forward-looking statements made during this call. References may also be made today to certain non-GAAP financial measures. The company has provided with its press release which is available on our website, reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures. Today you will hear from the following Leroy Ball, President and CEO of Koppers and Jimmi Sue Smith, Chief Financial Officer. I'll now turn it over to Leroy.

Thank you, Quynh. Good morning, everyone. We're pleased that you're joining us today to review our second quarter results. While we're still dealing with many of the headwinds that we talked about last quarter such as inflation, as well as pandemic and supply chain issues, Koppers delivered record sales in the second quarter. And we continue to make great progress in optimizing and expanding our business on our road to 300 million in adjusted EBITDA in 2025. We have much to share with you regarding each of these topics and more. But first, as we always do, we like to update on our Zero Harm efforts, which begin on slide four. In July, a number of senior leaders joined me in traveling to our Muncy crosstie treatment facility in Central Pennsylvania to present plant manager Al Rutz and his team with the 2022 Zero Harm President's Award. Our team at the facility provides treated crossties to class one and commercial railroads, producing more than 900,000 crossties in 2021 alone. The workforce in Muncy achieved best in company performance in safety, environmental responsibility, and innovation metrics. They ranked number one among all Koppers facilities worldwide in the effective use of leading indicators, those activities that demonstrate their commitment to identifying and eliminating hazards and are proven to help prevent safety incidents on a daily basis. In addition to the recognition they received, the plant received funds to direct to the charity of their choice in their community. They selected the Ronald McDonald House of Danville, Pennsylvania, who sent their Executive Director, Michael Turlis to happily accept. Congratulations to plant manager Al Rutz and his team at Muncy for truly embodying our Zero Harm culture. On slide five, we see that in the second quarter of 2022 a total of 23 of our 43 operating facilities worked accident-free. Year-to-date, as of June 30th, the total recordable rate of safety incidents was 8% lower than at the same time last year. The second quarter also saw the continued development of Zero Harm 2.0 a comprehensive effort to drive a Zero Harm culture deeper within the organization, with the goal to accelerate our progress to zero injuries and zero environmental harm. We're continuing to use the strategies and tactics that have been proven successful to date, while also gaining more input from frontline employees as the basis for developing highly practical training tools. We're concentrating on peer-to-peer interactions as a key to greater and faster awareness, acceptance, and incorporation of Zero Harm procedures. Currently, we're featuring 12 work streams being managed in a formal project environment to recatalyze Zero Harm and take it to the next level. In addition, we recently held a Zero Harm Idea Summit which consisted of 10 frontline employees from 10 different wood treatment plants. The participants took part in a two-day idea summit in Pittsburgh, discussing their daily experiences and brainstorming ways to advance Zero Harm. They came up with more than 130 ideas with the top 10 ideas presented to the Zero Harm team for evaluation and potential implementation. As always, I'm proud of the unwavering enthusiasm of our people around the world to continue making progress on our journey to zero. Every team member has my ongoing admiration and appreciation in this never-ending effort. Now, as stated in our news release this morning and highlighted on slide six, we achieved record sales in the second quarter, our first quarter in history where we exceeded $0.5 billion in sales. That was fueled by $95 million in price increases spread across all three business segments. Those increases more than offset a $15 million negative impact from our foreign sales being translated into a stronger US dollar and a $19 million negative impact from lower sales volumes primarily in our performance chemicals and utility and industrial product businesses. I'll provide more details later, but performance chemicals volumes were expected to fall short of prior year volumes, as Q2 2021 was still riding the wave of outsized pandemic demand. In spite of that, there were several bright spots on the sales front for performance chemicals and they were still able to overcome the lower volumes and some foreign currency impact with higher price and post record sales quarter. For Utility & Industrial Products, their sales decrease was not demand related. First of all, we exited our arrangement with Texas Electric Cooperative in the second quarter of last year which accounted for half of the revenue decline. And the other half is related to other challenges, mostly on the supply chain side that affected our ability to keep up timely with orders and shipments. That appears to be a widespread problem that the industry is facing, so we don't feel that we're losing business as a result because all business is being pushed out. From a positive standpoint, the underlying fundamentals of our business remain strong in the second quarter. The issue that we and everyone else has dealt with is the persistent inflationary cost increases in all areas. It still managed to outpace a 22% sales increase from price in the second quarter, in a strengthening US dollar that had an unfavorable impact of several million dollars on our foreign results. Coming into this year, we knew that the first half would not be as strong as the first half of 2021, but by the time we got to midyear we expected a much stronger second half and we would be exiting 2022 on a reasonable pace to reach our goal of $300 million EBITDA by 2025. It is in fact exactly where we find ourselves, one month into the third quarter. All the pieces are in place for each business unit to improve their second half profitability compared to the first half. Crosstie procurement and our railroad products and services business is now tracking at a pace well above last year. Demand and pricing in our utility and industrial products business have never been stronger. Add in a favorable near-term backdrop for pricing and demand in our Carbon Materials & Chemicals Segment and a solid backlog of projects that underpins performance chemicals demand in the back half of the year should represent record financial performance, more about that, when I return, later in the call. Now I'd like to turn it over to our CFO, Jimmi Sue Smith for a more detailed review of second quarter financial results. Jimmi Sue?

Thanks Leroy and good morning everyone. My comments are based on information contained in this morning's press release, which provided our results for the second quarter of 2022. On slide 8, consolidated sales for the second quarter of 2022 were $502.5 million, an increase of $61.5 million or 14% compared with $441 million in the prior year. This was our second consecutive quarter of record sales. By segment, sales for RUPS increased by $8.7 million or 4.5%. Sales for performance chemicals increased by $4 million or 2.7%. And sales for Carbon Materials & Chemicals increased by $48.8 million or 48.8% compared to the prior year quarter. On slide 9, second quarter adjusted EBITDA on a consolidated basis totaled $54.6 million or 10.9%, compared with $65.6 million or 14.9% in the prior year quarter. The decrease in year-over-year margin reflects the peak of pandemic fuel profitability experienced in our performance chemicals segment in the prior year quarter, juxtaposed with timing impacts from the current inflationary environment as well as the impact of an insurance recovery in our Carbon Materials & Chemicals business last year. Results for our RUPS segment are shown on slide 10. Sales for RUPS were $204.2 million compared to sales of $195.5 million in the prior year quarter, primarily due to pricing increases across all markets especially crossties and utility poles. Additionally, we're seeing higher volumes in our railroad bridge services business, partly offset by volume decreases in our utility pole business, mostly due to capacity and transportation issues driven by the current labor shortage as well as the transfer of some production from a third-party to our facility in Somerville, Texas in the prior year quarter. On the procurement front, market prices for untreated crossties have been stabilizing, although at elevated levels. And we are seeing the start of the improvement we expected to see in this area. Our crosstie procurement in the second quarter was higher by 17% and crosstie treatment increased by 8% compared to the prior year quarter. Adjusted EBITDA for RUPS was $13.2 million compared with $12 million in the prior year quarter. This improved profitability is attributed to improvements in our maintenance of way businesses as well as price increases which offset higher costs for raw materials, freight, and fuel and favorable absorption as procurement volumes improved. As shown on slide 11, performance chemicals had record sales of $149.6 million compared to sales of $145.6 million in the prior year quarter, driven by global price increases for copper-base preservative, partly offset by year-over-year decreases in volume for preservatives primarily in Europe. In the Americas, volumes were down only slightly compared to the record levels in the prior year. Adjusted EBITDA for performance chemicals decreased to $20.4 million from $34.5 million in the prior year quarter, as margins reflected higher raw material costs and higher cost inventory working through the system in a falling copper price environment. And lower volume partly offset by global price increases for preservatives. Slide 12 features the results for our Carbon Materials & Chemicals business. Second quarter sales totaled $148.7 million, compared to sales of $99.9 million in the prior year quarter. Higher pricing across all product lines drove the strong sales results. Carbon Materials & Chemicals saw adjusted EBITDA of $21 million, compared to $18.6 million in the prior year quarter, due to favorable demand and pricing environment. Sequentially, the average pricing of major products was 18% higher than in the first quarter of 2022, while average coal tar costs increased by 14%. Year-over-year, the average pricing of major products was 60% higher, while coal tar costs increased by 52%. EBITDA margin was down quarter-over-quarter as a result of an insurance recovery in the prior year period. On slide 14, we highlight our confidence in our ability to grow and generate cash. We continue to invest in our business through capital expenditures, while returning capital to shareholders through dividends, as well as opportunistically repurchasing shares. In the second quarter, we repurchased $7.3 million of shares bringing the year-to-date total to $13.8 million, with $76.9 million remaining under our authorization. We have $793 million of net debt and $317 million of available borrowings under the credit agreement as of June 30th. The net leverage ratio was 3.8 times for the quarter compared with 3.3 times at year-end 2021, reflecting in part a working capital usage of $54 million in the first half of the year. We remain committed to our long-term goal of two to three times net leverage and expect to reduce this metric by year-end through a combination of higher EBITDA and stable working capital. Longer term, our current net debt is 2.6 times our 2025 target EBITDA of $300 million. Slide 15 provides an overview of our new $800 million senior secured revolving credit facility announced in the second quarter. This replaces our prior $600 million senior secured revolving credit facility and $100 million senior secured term loan facility. The new agreement includes lower pricing tiers and additional financial flexibility to support our ongoing growth strategy, as well as sustainability initiatives. The new agreement will mature on June 17th, 2027, subject to a spring maturity in the event that our 2025 notes are not repurchased, redeemed, or refinanced prior to November 15th, 2024. It also contains customary covenants for credit facilities of this type. Additionally, the agreement is prewired to allow us to amend the agreement, with the approval of the sustainability agents, to incorporate key performance indicators tied to environmental, social, and governance targets, or external ESG rating targets, and corresponding price adjustments based on the company's performance against those metrics. This new agreement further positions us to create long-term value for our shareholders and also reflects our broader commitment to sustainability by moving towards integrating applicable ESG goals into our liquidity framework. As shown on slide 16, capital expenditures for the first half of 2022 totaled $55.8 million. Net of cash received from assets to sales and insurance recovery capital expenditures in the current year were $51.1 million. And with that, I will turn it back over to Leroy.

Thanks, Jimmi Sue. I will begin by sharing the notable happenings across our company during the second quarter. Now seen on slide 18, we're happy to welcome Kevin Washington to Koppers as Vice President of External Affairs. He's responsible for managing relationships with federal state and local government agencies, leading the company's legislative and regulatory public policy strategy, engaging with local community and industry stakeholders and overseeing our corporate communications function. Kevin comes to Koppers with more than 20 years of experience in these areas, most recently as head of government affairs at Illinois Toolworks, a global manufacturer of industrial products and equipment. Slide 19 features Jeff Senchak, director of transportation logistics, accepting the 2021 CN Safe Handling Award on behalf of Koppers for outstanding work in safety-related tasks surrounding rail equipment. This recognition can be attributed to our dedication and continuing efforts surrounding Zero Harm and responsible care. CN, a world-class transportation leader presents its safe handling award to customers who load freight cars with dangerous goods and meet strict standards for the safe handling and shipment of regulated products. On slide 20 is another example of how our teams worldwide continue to take the Zero Harm culture to heart in very practical ways. On a recent visit to our Ashcroft facility in British Columbia, I met the onsite team there, including David Sam, a mill operator. Now based on his years of experience David brought forth an idea of issuing different colored hard hats to employees based on their experience and skill sets. This simple yet effective idea has been accepted and implemented at Ashcroft. Newer employees wear yellow. Those with life-saving skill certification wear blue. This immediately visible designation helps team members know which of their colleagues may need more guidance regarding safety procedures and which ones can respond most effectively in an emergency. Slide 21 showcases our 2021 corporate sustainability report, which published recently. During 2021 Koppers made important progress in further defining, implementing and measuring our sustainability goals as part of creating ongoing value for the company and its stakeholders. As we consistently emphasize, our strategy to expand and optimize our business to significantly grow profitability is underpinned by our steadfast commitment to sustainability practices and Zero Harm safety principles. Sustainability touches every part of our company and requires our constant attention. Our global team continues to gain knowledge, confidence and a shared commitment to our ongoing success as a profitable responsible and civic-minded organization everywhere we operate. I encourage you to visit us online and learn more about our commitment to sustainability. Up next is a review of business sentiments impacting our operations both near and long term. So let me start on slide 23, with the business that had the roughest go of it this quarter, performance chemicals. And while second quarter profitability and margin significantly lagged 2021 as Jimmi Sue had mentioned, the issue was not demand-based which is good news. Yes, most major product categories trailed last year's comparable period, but that was expected given pandemic-fueled demand which continued through mid-June 2021 before abruptly stalling as behaviors began returning to pre-pandemic normalcy. The good news is that our flagship residential product MicroPro was only down by 1% in volume as further market share penetration offset a more normalized post-pandemic market. Sales volumes of our industrial product CCA were up by 25% representing the phase-out of pentachlorophenol for industrial treatment and the industry's move to CCA and other preservatives. Costs were the culprit as we've continued to experience record cost increases across all materials in addition to higher fuel shipping and labor costs. We continue to push through price increases where we're able and we'll continue following that course this year with significant price increases expected to affect our contracted customers effective January 1st, 2023. Now we're already well ahead of our expected pace for planned price increases for this year. This helped fuel our record sales quarter for performance chemicals as we realized $18 million in price in the second quarter and $34 million year-to-date in this segment. About half of the second quarter's higher prices came from our international businesses which helped them come in slightly ahead of 2021's results, despite the negative impact of the stronger dollar. The other half came in North America and only partially covered our cost increases. Copper dropped more than 20% during the quarter resulting in pulling forward some cost of goods sold, now this is the opposite of what happened in the second quarter of 2021 as copper pricing rose by 7% during that period. While broader economic indicators present a worrisome backdrop with higher mortgage rates pushing new home build rates and existing home sales lower plus consumer confidence on the decline, home renovation and repair expenditures are forecasted to continue to climb at healthy rates even in the next year. We continue to see strong demand in our business both on the residential and industrial side as the backlog of projects remains high. The remainder of the year will continue to be hampered by the stronger US dollar and some level of uncovered costs, but we expect to be in a strong position entering 2023 with pricing resets across the board that will enable us to combat any softness in demand. Slide 24 looks at the longer-term outlook for the performance chemicals business. In addition to what we expect to be at least GDP-ish level volume growth, we have several other initiatives in motion we believe put us in a position to capture greater sales and profitability in the future. First of course, is the need to pass on the unprecedented cost increases we've experienced throughout 2022 to our contractual customers whose price commitments from Koppers end this year. Now while we don't expect those negotiations to be easy, the cost issue is not a Koppers issue, but an industry issue. For the wood preservative industry to remain healthy we have to be able to adequately pass on our rising costs and on the whole, I expect that we will. As the global leader in our industry, we've demonstrated our commitment by investing almost $75 million over the past five and a half years adding and optimizing production and making our operations safer and more environmentally sound. In addition, we've invested millions more in our R&D efforts to continue advancing our preservation technology while also deploying top-notch support and service through our field engineering group. And while we're enduring some short-term pain in 2022, I'm confident we will enter 2023 with the right price and volume mix to move us back over the $100 million EBITDA mark with more room to grow. By the end of this year our CCA sales volumes will have increased 40% since 2019 reflecting us winning new business in addition to CCA taking a formidable share of the Penta market, as that preservative continues to be phased out in North America. We've added another oil-borne replacement for Penta to our portfolio as we recently began shipping DCOI to a sizable new account, while also securing business with three other industrial treaters. We recently restructured our sales organization to heighten focus on growing our industrial preservative business which is already reaping rewards as evidenced by the DCOI wins and several CCA account wins. We project that CCA volumes will continue to grow over the next several years at annual rates of 5% to 10% as it continues to be adopted as the Penta replacement. The US utility pole market continues to increase at rates outpacing GDP and our South American business continues growing at a rapid clip as CCA is the predominant preservative used in that region. Speaking of South America, that region is on track to have its second straight year of record profits and is now firmly our most profitable region outside of North America. As announced previously, we've secured property in Brazil to Greenfield a manufacturing facility to reduce our costs and grow with that expanding market. In Europe, we're working through a wholesale restructuring to bring that business back to an accessible level of profitability after losing a key product registration to the biocidal products registration process. Currently working on a plan to seek regulatory approval to produce and sell MicroPro in Europe which would be a shot in the arm for that business but is still a couple of years away. In the meantime, we're slashing costs consolidating what we can into Koppers existing footprint and further pruning our product and customer portfolio to fit a smaller more profitable and focused organization. The overview for our utility and industrial products business in 2022 is seen on slide 25. I'll start by saying that after several tough quarters of performance due to industry disruption, labor challenges, and spiraling costs our utility and industrial products business appears to be trending in a good direction. In fact, our second quarter adjusted EBITDA was its highest since our record second quarter 2020 results. If we remain on our most recent pace both our third and fourth quarters this year will represent new highs. Infrastructure-related funding has resulted in higher demand for pole volumes among utility customers while shipments are constrained by heavier interest and larger class one poles which are in limited supply. Challenges remain in getting products staged and shipped on schedule due to a bottleneck supply chain brought on by intermittent rail service and labor and trucking shortages. As a result, most customer accounts are on an allocation basis. The bottom line is that everything we are making is being sold and we have a perpetual backlog of material waiting to ship, as resources become available. Tracking and retaining truck drivers has been particularly difficult in this past year so we're using more third-party trucking providers than we have in the past to help us until things settle out. We're beginning to catch up in some areas and recouping our higher cost and are tracking well above our targeted $10 million price increase for 2022, although much of that has gone to cover even higher costs than we anticipated coming into the year. Through the first half of 2022, we've already realized $8 million in pricing increases. Most of our customers are now on quarterly pricing and freight cost reviews to minimize further exposure. Now that we're catching up on the pricing front, we're beginning to see the benefits of the many projects that have been in process over the past year. For a net cost of $10 million, we installed two new kilns, converted two plants to new preservatives and disposed of a treating facility in Sweetwater, Tennessee consolidating that capacity into our plants in Vidalia and Newsoms. Those projects are expected to generate $5 million in annualized EBITDA. This is simple math, as it translates into a multiple of two times. So to support these projects, we've converted approximately 70% of our Penta volumes to CCA, and in April we treated our last charge with Penta. Our treatment capabilities now include creosote produced by our Carbon Materials & Chemicals business segment, CCA, and DuraPine produced by our Performance Chemicals business segment, and Copper Naphthenate produced by a third-party supplier. We're considering the addition of DCOI treatment now that Performance Chemicals has added that to its product portfolio. From the supply side, we see the availability of wood remaining stable, with pricing being impacted by higher freight costs, which have been passed on as part of our price increases. Slide 26 offers a long-term view for our utility and industrial products business. Given the increased reliance on electricity and connectivity, due to more individuals working remotely, there's an obvious need to properly maintain the nation's utility pole network. In addition, we're hearing from most major utilities and cooperatives that the demand for pole volumes is expected to increase, even more over the next two to five years, both supporting the strength of this business as well as industrial preservative business and Performance Chemicals and Carbon Materials & Chemicals. The trend towards hardening the power grid includes pole replacements, which would make the network more resistant to extreme weather events. Supply chain issues impacting most infrastructure components, major investor-owned utilities are looking to solidify their supply chains by locking up volumes under long-term commitments. As a result, we're exploring various sales models that can support potential investments by Koppers to help stabilize an already stressed supply chain. This is an important undertaking as the Federal Infrastructure Bill has designated approximately $119 billion for utilities. We're in the process of adding peeling and drying capacity to serve our treating facility in Somerville, Texas and expect this initiative to begin contributing to profitability in early 2023. As a reminder, Texas is a creosote pole market, and with market pricing for creosote moving up significantly this year, plus a strain on the creosote supply chain due to reduction in coal tar markets, our value as an integrated treater, who can provide stability for the entire supply chain of treated products, is a major differentiator for us and we believe separates us as a supplier. Similarly, we continue our due diligence on a prospective location for industrial wood treatment and wood preservation chemical manufacturing capability to serve markets along the west coast of the United States and are getting closer to pulling the trigger on a potential site. Australia is still experiencing high demand for poles in order to restore power lines after various forms of natural disasters, including wildfires and cyclones. A dry kiln installed last year at our Takura site is helping us to capture market share from an increased demand for soft wood and supply problems are hindering delivery of hardwood products. On slide 27, we provide the 2022 outlook for our railroad products and services business. Broadly speaking, the first half of 2022 has been challenging and this business finished the second quarter behind the curve on expected tie purchases. But similar to utility and industrial products, our RUPS business exits the second quarter trending in the right direction. By year-end, it should be generating meaningfully higher profitability on an annualized basis. The Association of American Railroads reports that rail traffic for the first half of 2022 was lower compared with last year. Specifically, US carload traffic fell by 0.1%, intermodal units were down 6.2% and combined US traffic declined by 3.5%. Amid these trends, the Railway Tie Association predicts a 0.8% decrease in demand for crossties in 2022 to $18.6 million with lower Class I volumes and modest growth among commercial railroads. That is likely due to demand being dampened because of the higher cost of hardwood that had saw mills divert that product into higher value markets, which is now running treaters dry inventories dangerously low. We've certainly seen that trend as the price of green ties have increased upwards of 30% in certain markets, while air-dried inventory has dropped almost 25% from its peak in the first quarter of 2021. That said, we're running at a slightly better pace on ties treated and sold through June compared to prior year and expect to finish the year up in volume, by about 2%. Now as for green tie purchases, while we're still behind our desired pace for this year, which continues to affect our cost absorption, a softening hardwood market due to recessionary fears and interest rate hikes began to improve crosstie availability in May. Now to give you an indication of the improving trend, our purchases were up over 2021 in June by 21%, for the second quarter by 17% and for the year-to-date through June by 3%. We're still trailing 2021's rate of $6.3 million ties but expect to catch it in October and finish the year at $5.5 million ties purchased. As I mentioned when I was discussing the state of the Texas creosote pole treating market, continued glass furnace steel closures and the Russia-Ukraine war has put stress on the creosote supply market and raised the cost to produce the product significantly. We're currently underwater in that category for our contractual Class I business and are raising pricing to account for it in the commercial market. Smaller treaters are struggling to get creosote and when they do, they're paying significant premiums. Our vertically integrated business model supports stable supply to our customer base, for which I believe we should be receiving more value. If this situation continues for an extended period, I believe Koppers is in the best position to benefit as the only supplier in the industry that can guarantee supply, due to our control of the entire supply chain for our product. The commercial crosstie market dynamics remain very competitive. However, even commercial crosstie volumes have declined profits have increased because we implemented price increases before the full impact of higher costs were felt. As projected, the outlook for our maintenance away businesses has improved and we're seeing that positively impact our profitability. We finished the first half of the year $1 million better than last year and still anticipate a $4 million year-over-year EBITDA improvement for the full year 2022. On slide 28, we provide a longer-term view of RUPS. Now according to the Railway Tie Association, 2023 should bring modest increases in Class I and commercial crosstie demand to $18.8 million or a 1.1% increase. We're expecting the market to increase slightly more than that at 2%. And we believe that our volumes will increase by 5% or greater next year as the market growth is skewed towards customers so we have greater share with as well as share we are positioned to take with the North Little Rock facility upgrade coming online in early 2023. Comprehensive network optimization program is expected to drive a number of EBITDA improvements in this business, as mentioned expanding capacity at our facility in North Little Rock Arkansas will drive efficiencies and enable increased volume growth in 2023 and beyond. In similar fashion, adding pole treatment capabilities at our plant in Somerville, Texas will improve our cost absorption and lower overall unit costs. Higher crosstie purchases we plan to build up our untreated tie inventory for air seasoning, which will of course increase working capital by anywhere from $40 million to $55 million, with part of that increased offset by plant work and capital reductions in our performance chemicals business. Strong backlog and maintenance away projects should lead to improved profitability for this business as long as the railroads give us the track time needed and we achieve better crew continuity. Longer term, I'd not be surprised to see the pendulum swing back and more of this maintenance of way work get contracted out as railroads realize that trying to hire train and retain crews are better left to others to worry about. My thoughts on the Carbon Materials & Chemicals business for 2022 are seen on slide 29. Now I begin by stating the obvious, which is that Carbon Materials & Chemicals is on track to deliver one of its strongest years on record in its current formation of having just three distillation facilities globally. It was not that long ago that we had three or more facilities in each of the regions of the United States, Europe, and Australasia and could not consistently generate the levels of profits and margins that we have over the last several years. And we began the year by saying confidently that we had visibility for Carbon Materials & Chemicals to have a very strong first half but we were apprehensive about extending that all the way out in 2022 because we were uncertain if business conditions would hold up and expected that costs would continue to catch up to price. Now here we are in early August and we have pricing settled on major business for the third quarter and in some cases for the rest of this year. Accordingly, we're more bullish on Carbon Materials & Chemicals for the remainder of the year. Now according to IHS Markit, the global light vehicle production forecast that was updated in June 2022 reflects a near-term increase in auto production in China as COVID lockdowns expire and demand stimulus takes effect. In Japan, Korea, and South Asia production estimates have been revised downwards and also North America and Europe are continuing to feel the pressure from supply chain issues. Our Carbon Materials & Chemicals product served the automotive market in a variety of ways, so these trends provide important guidance for this business. As such, demand from the automotive and other Carbon Materials & Chemicals markets served remain strong overall, helping to offset the impact of rising raw material costs. We remain alert for signs of a demand slowdown, given the challenges of supply chain constraints across the globe, elevated energy prices, and inflationary pressures. Now for example, higher energy costs and even labor shortages have caused aluminum smelters in the US and Europe to curtail production, moving some demand from the market. That is balanced somewhat by blast furnace steel, which continues to see shrinking capacity in developed countries, reducing the levels of coal tar raw material produced and raising the price of the product. China remains in partial COVID lockdown while the Russian-Ukraine conflict has caused European distillers to lose 220,000 metric tons of tar on an annual basis. Our share of that Russia-Ukraine loss is approximately 60,000 metric tons. With tar pitching short supply, prices have soared to record highs on both the supply and demand sides. In China, pitch and tar prices also remained at a high level, thereby driving raw material costs up globally. As Jimmi Sue mentioned in her commentary, raw material cost is 53% higher year-over-year, while average pricing for major products is 60% higher. Now over the years the production of coal tar in developed countries has decreased and while the aluminum industry has experienced a similar phenomenon reducing its need for pitching those geographies. The same cannot be said or at least not to the same degree for the North American creosote market. Yes, crosstie insertions have pulled back modestly over the past five years for a host of reasons. But now for the first time in 2022, we've reached a tipping point where creosote is becoming short, at least at price levels that the railroads have become accustomed to. And we're contractually locked in on our Class I contract, although we do have annual opportunities to trigger very modest increases. However, anything above the contractual minimums on or any open market purchases will see significant increases. I foresee this dynamic putting tremendous economic pressure on anyone that's not an integrated treater, especially the smaller players both in coal tar distillation as well as in treating, which could present different opportunities for Koppers. The confluence of market factors we've seen arise through the pandemic and up to the present justifies the strategy we implemented back in 2016. Now that strategy called for Koppers to become the largest global player in wood preservation technologies, using an integrated supply chain to competitively differentiate ourselves in the market and to be more resilient to market shocks. Since the coal tar market is continuing to shrink, we reintroduced hybrid pitch in North America supplementing coal tar with petroleum byproducts. Customer acceptance has been positive thus far and our initiative to improve our yields of higher value products is reaping the benefits we expected, especially so in this market. Along with various cost improvement projects, we're on track to achieve the approximate $8 million in EBITDA contribution that we had outlined earlier this year. Slide 30 looks ahead for Carbon Materials & Chemicals through 2025. As industries worldwide work to reduce the reliance on Chinese exports and address the unpredictability of shipping logistics, it would seem reasonable that Carbon Materials & Chemicals stands to benefit. In the steel industry, decarbonization projects to reduce or eliminate coke from the steelmaking process are continuing. We expect the trend to move toward direct reduced iron and electric arc furnace projects, which means further reductions of coke production and coal tar availability. As access to coal tar becomes more difficult, our product development and related capital investments will continue to yield great benefits and set us up for even more success. I already spoke of the benefits we're beginning to see from our yield optimization project which is enabling us to produce more carb pitch in a short market than we could under normal conditions. And we're still in the early stages of this and expect our yields to improve further as we refine the process. In our hybrid pitch product, we're also looking to introduce variations of our creosote products to get qualified for rail and utility applications to help ensure stability of supply to those industries for the foreseeable future. Finally, we continue to further our work on our enhanced carbon product used as a coding for battery and materials in North America, Europe, and Australia. Part of our 2022 capital spend relates to a project that will further enhance our pitch yields, while also setting the stage for entry into the electric vehicle battery market, if acceptance and qualification of our product continues its current positive trajectory. If we find success in entering the EV battery market, Carbon Materials & Chemicals will firmly move into the specialty chemical space. That point this business will be much more than the business of the past before the transformation that we begin in 2015. And as we deliver on the various milestones, we believe that the investment community will factor in the potential upside appropriately and assign a higher valuation for Koppers. On slide 32, we're increasing our 2022 sales forecast of what would represent a new high for Koppers of $2 billion compared with $1.68 billion in the prior year. This reflects a projected top-line improvement in every business segment largely driven by price. On slide 33, we're reaffirming our 2022 EBITDA at $230 million, which would represent our eighth consecutive year of EBITDA growth on a comparable basis. Results from our diversified portfolio vary across the three business segments and differ from the mix of results we presented in May. While our RUPS business may have had a challenging 2021 and underwhelming first half, both the rail and utility businesses are trending positively, which sets them up for a strong second half of 2022 and in a great position to improve further in 2023. However, since RUPS is behind where we had expected them to be heading into this third quarter, we're reducing our expected level of adjusted EBITDA improvement in 2022 to $12 million compared to the $18 million we were projecting back in May. In performance chemicals, we're showing an expected $16 million adjusted EBITDA decline from their record prior year, partly due to their softer Q2 results and partly due to the projection of the same moving forward. Current estimate for performance chemicals is $10 million lower than what we've projected in May. Volumes are currently remaining solid and costs seem to be peaking with the exception of copper, which has actually declined in the past few months. The price increases should finally catch up on our non-contracted business and the industrial markets should remain strong which should enable us to have a better back half of the year compared to the first half. By the time the remainder of our price increases take effect in January of 2023, we will be in a good position to have a much-improved 2023. And finally, for Carbon Materials & Chemicals, we're now expecting a significant year-over-year increase in EBITDA driven by strong overall market dynamics which have enabled us to maximize the value of what has been a short commodity. In May, we forecasted adjusted EBITDA for Carbon Materials & Chemicals to finish the year down $6 million compared to the prior year. We're now expecting it to finish the year up by $10 million, erasing the pull back and forecast for RUPS and performance chemicals. Now our forecast is still hedging some pull back in the fourth quarter so to the extent current marketing conditions persist, there still remains upside in Carbon Materials & Chemicals results for this year. And while it will be difficult to maintain our current levels of profitability for Carbon Materials & Chemicals throughout 2023, we won't know better until we get closer to year end. We still have other projects and processes that can improve profitability and offset partially any softening of our markets. And while I always prefer to get off to a strong start like we did last year, what I'm always most focused on is where we finished the year knowing that our results can shift from quarter to quarter. And that's why we do not provide quarterly guidance and instead focus on annual guidance, which for this year remains $230 million, which will be a new record will be our eighth straight year of improvement excluding KJCC. And we still believe we're on track to achieve our 2025 target of $300 million in EBITDA. On slide 4, our adjusted EPS guide for 2022 remains unchanged from the last quarter of $4.10 compared with $4.21 in the prior year. And while operations are additive to results, a higher effective tax rate is expected to directly impact our bottom line. Finally, on slide 35, we continue to expect our capital spending net of cash proceeds from asset sales will be in the range of $80 to $90 million with approximately $35 million dedicated to growth and productivity projects. As a final thought, our focus remains on executing our strategy to expand and optimize across all of our business segments and generate continued consistent financial performance, as measured by adjusted EBITDA, adjusted EPS, and free cash flow. Our balance and diversified portfolio continues to position Koppers as a great defensive investment option in most economies as we've demonstrated consistently improving performance over the past seven years despite disruptive marketing conditions posting a record that not many competitors can match. We will continue to control what we can with a firm belief that our story will resonate among those who appreciate the Koppers brand of results-driven performance. With that, I'd like to open the floor to your questions. Thank you all for dialing in and for your interest in Koppers.

We will now begin the question and answer session. Instructions will be given for the question-and-answer session. The first question is from Chris Howe from Barrington Research. Please go ahead.

Good morning, everyone. Thank you for taking my questions.

Hi, Chris.

I wanted to start on the slide where you mentioned the third-party truck assets as we consider this versus having your own drivers do it internally. Can you start here and just talk about the labor challenges and moving beyond this the labor challenges that you're experiencing in the other segments? And once the labor environment does show some level of improvement how you expect that to benefit the overall profitability of the company?

Sure. I mean, we'll just start by saying labor as you point out and as we pointed out in our prepared remarks has been a significant challenge. It's been a challenge I think that all companies have been faced with. Trucking has been a challenge certainly for the past couple of years and I think will continue to moving out as again that industry faces a shortage of drivers. So we're trying to do some things to where we can even incentivize some of our folks within our businesses working out at the sites to potentially move into that profession. And we're seeing a little bit of early success in that but obviously that creates issues within the plants as well. So it's going to take a little while. I think until things settle out and certainly a strong economy is not helping in that regard in terms of individuals having a lot of choices and making different decisions coming out of the pandemic. So we're doing everything we can to increase our recruiting efforts and we've made some headway in that regard as well. So we're starting to see a little bit of improvement out at the sites. But it's a challenge that's going to continue to persist throughout this year and certainly into next. It's one of those things where there's certainly a cost to us in terms of having high turnover. There's a cost from a safety standpoint. There's a cost from a training standpoint. There's a cost from a productivity and efficiency standpoint. It's hard to put your fingers on exactly what that is, but I can guarantee you once we have greater stability within our operations there will be meaningful improvement as a result.

Okay. And then I'll ask one more even though I have quite a few other questions here. As we think about existing home sales decreased in June five consecutive months of declines we're in this environment of rising interest rates although some of them have pulled back. But it would seem to me that the performance chemicals segment as a whole is more resilient through an environment. And that on the other side of this as inventory returns interest rates taper and some of the buyers who perhaps left the home market come back in to a much more favorable housing market price that your repair and remodeling business could get going and we could see more decks being built and so forth similar to what we saw in the pandemic, maybe slightly lower than that but it would seem like levels could return once we look beyond the valley.

Yeah. That's certainly all I think true Chris. We're actually very pleased with where our volumes are at as we sit here today. Our volumes right now are not the issue and we don't expect that they're really going to be moving forward. There's been nice growth in these markets over the past couple of years. Certainly, we've taken some share which has helped as well. But just as I pointed out in the prepared remarks, last year was a record second quarter and we were still feeling pandemic-fueled demand up through really the middle of June. So, comparatively speaking, our MicroPro volumes were down by about 1% from a volume standpoint in the second quarter. So, they held up pretty nicely and our CCA volumes were significantly stronger just because of its displacement of Penta that's moving out of the market. So, I think that volume has held up well and will continue to hold up well moving forward. Yes, obviously, interest rates rising, existing home sales slowing, typically are markers that indicate potential slowdown in this business but you're right the repair and remodeling market is a pretty resilient market. And I just say at this point in time, we haven't seen any pullback to date. And if there is we don't expect it to be meaningful in the grand scheme of things. Our bigger near-term issue that we're working to resolve is in getting those ever-increasing cost increases pushed through. And that's what we're working on here that we expect will be in place in terms of our bigger customers by the end of this year heading into next. The good news is in most of our major cost components, we're starting to see things crest. And so there's still some work to do on our non-contracted customers and we'll see some of that come through and benefit us in the second half. But I like where the performance chemicals business is overall. The markets are still pretty strong and inventories are low. So it's still in a decent spot here as we enter the second half of the year and 2023, we certainly expect will be much stronger.

And as you put through that January price increase do you anticipate keeping some of this price as some of the cost pressures alleviate in the performance chemicals segment?

Well, it's a good question. Unfortunately, we haven't seen anything alleviate thus far other than copper pulling back a little bit. And we've had a certain approach with our customers as it relates to copper anyways it's gone up and down over the years and we'll continue to work with them on a model that helps them be successful which helps us be successful. So for us, it's about balancing being able to get price and retain our volumes as well. Obviously, we don't exist out in the market without any competition and so we realize that our customers have choices and we do everything we can to make sure that we're in the best position to win the business and to get fair value for our products. We'll continue that approach. And again, I'm confident in our team and I'm confident in our business model that'll result in successes as we head into 2023 and I think a good bit of the price increase will stick longer-term because I don't think some of these costs are necessarily going away. From that standpoint, I think we should be able to hold onto most of it.

Great. Thanks for taking my questions.

Thank you.

And the next question will come from Chris Shaw from Monness, Crespi, Hardt. Please go ahead.

Good morning everyone. Can you clarify how the decline in copper prices, along with high-cost inventory and expected price increases for CCA, will affect profitability in that segment for the second half and beyond? Additionally, I know you have hedges in place for copper. How do you see all of this playing out over the next six to twelve months?

Yes. Hi Chris. It's Jimmi Sue. We hedge copper, but there are some timing differences as the higher-cost inventory moves through the system while copper prices decline. I believe this will be a temporary situation, lasting a couple of months rather than six. We expect that business to return to the margins we are accustomed to. In the third quarter, we might not see significant results, but rather in the fourth quarter. The third quarter could serve as a transitional period between the two.

Are you guys hedged out on copper for 2023?

We are fully hedged for 2022 and we have started layering in some hedges for 2023.

And how does your, I guess, hedge strategy change based on just the volatility recently in copper? Anything or do you try to stick to the same sort of policy?

Yes, well, so Chris we work with our customers to try and basically be able to lock in our business and lock in a significant piece of our cost structure. So a big part of what we end up hedging is with committed business. Now there's hedging we do outside of that as well, but it's a smaller piece of the overall hedging strategy. So our hedging strategy to date has not changed.

Got it. And then RUPS on the rail business, are your forecasts or the industry's forecast for prototype demand, are they based on actually talking to the customers, or is that based on a certain level you expect of replacement every year and then differing to what they've been doing in the more recent past? It seems like they've been under replacing ties, so I would think maybe demand would get better at some point, but is that too far off in the future? And this is just based on real data from the customers themselves?

Yes. So we quote I think data from the Rail Tie Association for that particular index, and we certainly have a view on it based upon our discussions with customers. And like I said we see it a little more aggressive, although, again they're still small rates overall. And for us in terms of the discussions we've had with our customers, we do see some of our customers that are planning to increase their insertions at a higher rate at least next year than again what that data would suggest. So we are slightly more bullish on where that's going. But in terms of the overall crosstie replacement market, we have to take into account the fact that go back 10 years or so ago and the introduction of borate, creosote-treated ties which extend the life of ties the improvement of technology to detect tie wear and failure and things like that have all improved. And at the same time, the railroads have essentially slimmed down their lines as well, which has all sort of contributed to a lower base. I don't think we're getting back to $23 to $25 million in crosstie replacements in a year. I don't think that's realistic given the state of where things are at right now. But I think overall, we're still going to see pretty decent demand and it'll increase and sometimes move up and down depending upon when railroads decide that they want to go heavier in terms of their repair replacement cycle over a given two or three-year period. So we've seen a lull in that over the last few years. At least with one of our customers we're going to see a pickup in that over the next couple of years. And as for the others again something could happen in the next year or two that might have them do the same, but the data is the data. It's coming from an industry association and we have our view on it, which is slightly better than what I think they're coming out with.

Great. That's helpful. Thank you.

Yes. Sure.

At this time, there are no further questions. I would like to turn the conference back over to CEO, Leroy Ball for any closing remarks.

Okay. Thank you. And I just want to thank again everyone for participating in today's call and again for your continued interest in Koppers. Everyone stay safe please. Thank you. Bye-bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.